Correlation Between Groenlandsbanken and Moens Bank
Can any of the company-specific risk be diversified away by investing in both Groenlandsbanken and Moens Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Groenlandsbanken and Moens Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groenlandsbanken AS and Moens Bank AS, you can compare the effects of market volatilities on Groenlandsbanken and Moens Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Groenlandsbanken with a short position of Moens Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and Moens Bank.
Diversification Opportunities for Groenlandsbanken and Moens Bank
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Groenlandsbanken and Moens is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Moens Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moens Bank AS and Groenlandsbanken is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Groenlandsbanken AS are associated (or correlated) with Moens Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moens Bank AS has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Moens Bank go up and down completely randomly.
Pair Corralation between Groenlandsbanken and Moens Bank
Assuming the 90 days trading horizon Groenlandsbanken AS is expected to generate 0.9 times more return on investment than Moens Bank. However, Groenlandsbanken AS is 1.11 times less risky than Moens Bank. It trades about 0.04 of its potential returns per unit of risk. Moens Bank AS is currently generating about 0.03 per unit of risk. If you would invest 62,000 in Groenlandsbanken AS on August 25, 2024 and sell it today you would earn a total of 7,000 from holding Groenlandsbanken AS or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groenlandsbanken AS vs. Moens Bank AS
Performance |
| Timeline |
| Groenlandsbanken |
| Moens Bank AS |
Groenlandsbanken and Moens Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groenlandsbanken and Moens Bank
The main advantage of trading using opposite Groenlandsbanken and Moens Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken position performs unexpectedly, Moens Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Moens Bank will offset losses from the drop in Moens Bank's long position.| Groenlandsbanken vs. Dataproces Group AS | Groenlandsbanken vs. cBrain AS | Groenlandsbanken vs. ALK Abell AS | Groenlandsbanken vs. ChemoMetec AS |
| Moens Bank vs. Dataproces Group AS | Moens Bank vs. cBrain AS | Moens Bank vs. ALK Abell AS | Moens Bank vs. ChemoMetec AS |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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